Causes of consumer bankruptcy
An insolvency may be caused by the lack of control over one’s own expenses or loans taken without any consideration. Consumer bankruptcy is never caused by a single, mundane decision. The source of it lies in a long-term negligence of liabilities, inconsiderate decisions, and careless attitude. There are a few causes of consumer bankruptcy and it cannot be boiled down to only one root. The loss of job, sickness – these are among the most common factors that cause an unfavourable situation. Some people also declare bankruptcy because of the loss of a close person, mental breakdown, depression, or too high amount of obligations to handle.
On what grounds can consumer bankruptcy be declared?
The legal grounds for declaring consumer bankruptcy are provided by regulations from the 31th of December 2014 that changed the act on “Bankruptcy and rehabilitation law”. A person that is insolvent, has no money for everyday expenses or needs to pay loans may resort to insolvency court proceedings. If the delay in paying off current liabilities exceeds 3 months, a consumer may declare bankruptcy.
Who benefits from consumer bankruptcy? Formal matters
Declaring consumer bankruptcy can be beneficial also for people who are the defendants in court or enforcement proceedings, which are connected with debt collection. After these people declare bankruptcy, all proceedings are cancelled and all creditors cannot demand the payment of debts. Recovery proceedings have similar rules. Bankrupts, after they have declared bankruptcy, cannot be contacted by debt collectors.
How does a bankrupt benefit from consumer bankruptcy as a human being?
There are many benefits of consumer bankruptcy in practice. Above all – an insolvent person gains financial freedom and gets rid of an overwhelming feeling of hopelessness. Consumer bankruptcy brings both tangible and intangible benefits, and in both cases, the quality of life is highly improved.
The first main benefit is that a person declaring consumer bankruptcy has debts written off after an application to declare bankruptcy has been approved. Since then, all liabilities are immediately cancelled.
Declaring consumer bankruptcy also improves a sense of comfort and guarantees a relief from stress that has been present during long-term proceedings against creditors or debt collectors. Because of that, life comfort is highly improved – a debtor can again seek professional challenges and enjoy life. What is more, declaring bankruptcy positively influences health, as all worries disappear. It is worth noting that a bankrupt does not have to struggle with overwhelming guilt, because the closest relatives do not need to worry about an indebted person’s future (especially in terms of finances).
Summing up, after declaring consumer bankruptcy, we can: